Posts tagged ‘banks’
July 14th, 2012
There is discussion these days about whether hedge fund advisors are saviors or villains. We don’t take either side of the debate but we do study available Securities and Exchange Commission ((SEC)) data. Our recent analysis of the June 2012 data revealed that 11.58% (1 in 9) of all private fund advisors (including hedge funds and private equity funds) have at least one “significant adverse regulatory event” listed in their Form ADV. That particular finding wasn’t too surprising to us. What was striking about the private fund data was that the regulatory violators tended not to be hedge funds. The more egregious private fund violators were the large banks and large brokers, many of which place their clients into their own hedge fund products.
Our most recent finding is that 70.19% of the private fund regulatory violators (332 advisory firms out of 473) were firms that either were banks or brokers, or had affiliations with banks and brokers. Contrast this with the percentage of “non-violator” private fund advisors (21.10%, 762 out of 3611) that had ties to banks and brokers. In other words, the independent hedge funds and private equity advisors are much more likely to have clean regulatory records and be trustworthy stewards of client assets.
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